Creation and Authority.--The Securities and Exchange Commission
was created under authority of the act approved June 6, 1934,
known as the Securities Exchange Act of 1934 (48 Stat. 881; 15 U.S.C.
78a to 78jj). The authority of the Commission has been increased by
the passage of the following: the act approved August 26, 1935, known
as the Public Utility Act of 1935, title I of which, vesting new duties
in the Commission, is known as the Public Utility Holding Company
Act of 1935 (49 Stat. 803; 15 U.S.C. 79a to 79z-6); the act approved
August 3, 1939, known as the Trust Indenture Act of 1939 (53 Stat.
1149; 15 U.S.C. 77aaa to 77bbbb); the act approved August 22, 1940,
known as the Investment Company Act of 1940) (54 Stat. 789; 15 U.S.C.
80a-1 to 80a-52); the act approved August 22, 1940, known as the Investment

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Advisers Act of 1940 (54 Stat. 847; 15 U.S.C. 80b-1 to 80b-21).
The Commission's authority was further increased by the
provisions of Chapter X of the National Bankruptcy Act, as amended,
of June 22, 1938 (52 Stat. 883; 11 U.S.C. 501-676).

Purpose.--The Commission was organized on July 2, 1934. Its
purpose is to administer the Security Act of 1933, as amended (48
Stat. 74; 15 U.S.C. 77a-77aa), the Securities Exchange Act of 1934, as
amended, the Public Utility Holding Company Act of 1935, the Trust
Indenture Act of 1939, the Investment Company Act of 1940, the
Investment Advisers Act of 1940, and to perform certain duties in
connection with corporate reorganizations in Federal courts, under the
provisions of Chapter X of the National Bankruptcy Act, as amended.

Organization.--The Commission is composed of five members
appointed by the President by and with the advice and consent of
the Senate. Not more than three members may be of the same
political party. The statutory term of office of a commissioner is
5 years, with terms arranged in such manner that a term expires each year.

The staff of the Commission has been organized into the following
divisions and offices:

The functions of the Commission are divided into the following
groups: supervision of registration of security issues and suppression
of fraudulent practices in the sale of securities under the Securities
Act of 1933; supervision and regulation of transactions and
trading in outstanding securities, both on the stock exchanges and in
the over-the-counter markets, as provided in the Securities Exchange
Act of 1934; regulation of public-utility holding companies under
the Public Utility Holding Company Act of 1935; supervision of
indentures used in the public offering of new security issues as provided
under the Trust Indenture Act of 1939; registration and regulation of
investment companies and investment advisers under the Investment
Company Act of 1940 and the Investment Advisers Act of 1940; and
the preparation of advisory reports on plans, and participation as a
party, in corporate reorganizations under Chapter X of the National
Bankruptcy Act.

Securities Act of 1933.--This act authorizes the Commission to
compel a full and fair disclosure to investors of the material facts
regarding securities publicly offered and sold in interstate commerce
or through the mails, and to prevent fraud in the sale of securities.
Registration statements covering securities to be sold are filed on
forms promulgated by the Commission. These registration statements
are required to contain specified information, including financial
statements, certain exhibits, and the form of the prospectus proposed
for use in selling the securities.

No securities may be offered or sold to the public in interstate commerce
or through the mail by issuers, underwriters, or dealers unless

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there is in effect a registration statement covering the securities, or
unless they are exempt from registration under the law. The effective
date of a registration statement is the twentieth day after filing or such
earlier date as the Commission may determine, having due regard to
the adequacy of the information respecting the issuer theretofore available
to the public; to the facility with which the nature of the securities
to be registered, their relationship to the capital structure of the issuer
and the rights of holders thereof, can be understood; and to the public
interest and the protection of investors.

A prospectus giving the pertinent facts as to the issue must be
delivered to the prospective purchaser in connection with any sale
of a registered security involving the mails or interstate commerce.
The Commission is empowered to refuse or suspend registration in
cases where the information given is incomplete or misleading in any
material respect. The act provides for civil and criminal liability on
the part of issuers and others for the fraudulent sale of securities.

Securities Exchange Act of 1934.--This act is designed to eliminate
abuses in the securities markets, and to make available currently
to the public sufficient information concerning the management and
financial condition of the corporations whose securities are listed on
national securities exchanges to enable the investor to act intelligently
in making or retaining his investments and in exercising his rights as
a security holder.

The act prohibits the manipulation of securities prices and the use
of fraud in securities transactions. It provides for registration of and
supervision over stock exchanges, brokers and dealers, and associations
of brokers and dealers.

Regulation of the use of the national credit to finance trading in
securities is accomplished through margin requirements fixed under
this act by regulations promulgated by the Board of Governors of the
Federal Reserve System. Such regulations are enforced by the Commission.

The acts provides for the registration of securities listed on exchanges
and, under certain circumstances, for the admission of securities to
unlisted trading privileges upon exchanges. Where a security is
listed and registered on an exchange, the issuer is required to file periodic
reports relating to its condition; officers, directors, and principal
stockholders are required to report their holdings to the Commission;
solicitations of proxies in respect of registered securities must be accompanied
by certain information specified in the act and in the rules
of the Commission.

Public Utility Holding Company Act of 1935.--This act is designed
to eliminate abuses and to provide a greater degree of protection
for investors, consumers, and the public in the field of public
utility holding company finance and operation.

The duties of the Commission include the effectuation of geographic
and corporate simplification of holding-company systems; supervision
of security transactions by holding companies and subsidiaries; supervision
of acquisitions of securities, utility assets, and other interests by
holding companies and their subsidiaries; and supervision of dividends,
proxies, intercompany loans, and service, sales, and construction contracts.

Trust Indenture Act of 1939.--This act requires that bonds, notes,
debentures, and similar securities (unless exempted by the act) publicly

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offered for sale be issued under an indenture which meets certain
statutory standards, including provisions for a disinterested corporate
trustee with adequate powers and adequate duties and responsibilities
with respect to the protection and the enforcement of the rights of
the bondholders. Compliance with these requirements is secured
through the statutory procedure for qualification of indentures with
the Commission.

Investment Company Act of 1940 and Investment Advisers Act
of 1940.--The first act provides for the registration and regulation
of all types of investment trusts and investment companies. The
second act provides for the registration of persons engaged in the
investment advisory business and prescribes prohibitions against certain
abuses which have been found to exist.

Chapter X of the National Bankruptcy Act, as Amended.--This
chapter, which in 1938 extensively revised section 77B of the act,
affords the appropriate machinery for the reorganization of corporations
in the Federal courts under the bankruptcy power. The duties
of the Commission under the chapter are, primarily, to act as a participant
in proceedings thereunder, at the request or with the approval of
the court, in order to provide independent expert advice on matters
arising in such proceedings. The Commission is also empowered to
prepare, for the benefit of the courts and security holders, advisory
reports on plans or reorganization submitted in such proceedings.

No Guaranty by Commission Against Loss to Investors.--No
statue administered by the Commission guarantees investors against
loss. The Commission is given certain powers to control the issuance
of securities by public utility holding companies and their subsidiaries
under the Public Utility Holding Company Act of 1935.
With regard to all other issues of securities, however, the Commission
can merely require complete disclosure of information, in the light of
which an investor may adequately form his own opinion.

Complaints and Inquires Regarding Securities.--Complaints
and inquiries should be directed to the Philadelphia office or to any
regional office of the Securities and Exchange Commission. Registration
statements and other public documents filed with the Commission
are available for public inspection at the public reference
room at the home office of the Commission in Philadelphia and, to a
more limited extent, in its regional offices in New York and Chicago.
(Photostatic copies of the material may be purchased from the Commission
at a price of 10 cents a page for orders of less than 100 pages
and 7 cents for each additional page over 100.)

Divisions and Offices of the Commission

Opinion Writing Office.--This Office is responsible directly to the
Commission and is charged with the duty of assisting the Commission
in the preparation of findings, opinions, and orders based upon evidence
in the records of hearings, for promulgation by the Commission in
contested cases arising under the statutes administered by it.

Office of the Solicitor.--This Office has supervision over litigation
instituted by or against the Commission, including petitions for review
of Commission decision. The Solicitor is the chief legal adviser to
the Commission.

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Office of the Chief Accountant.--This Office consults and advises
with the Commission on accounting matters; exercises general supervisory
control over accounting and auditing policies as they relate to
financial statements filed with the Commission; exercises supervisory
control over the drafting of requirements governing the form and
content of financial statements filed with the Commission and requirements
regarding uniform systems of accounts; prepares briefs, reports,
and memorandums regarding highly technical or controversial
accounting and auditing questions; and conducts studies, investigations,
and researches involving accounting.

Corporation Finance Division.--This Division is responsible for
(1) the examination of statements for the registration of securities
under the Securities ct and the Securities Exchange Act (as well as
subsequent annual or other periodic reports), the conduct of hearings
in refusal or top order proceedings against registration statements
for securities under the Securities Act and in proceedings for suspension
or withdrawal from registration of securities listed on national
securities exchanges under the Securities Exchange Act, and the examination
and handling of proxy statements filed under the Securities
Exchange Act; (2) the examination of trust indentures filed for qualification
under the Trust Indenture Act of 1939; (3) the performance
of the duties and functions of the Commission in corporate reorganization
proceedings under Chapter X of the National Bankruptcy Act, as
amended; (4) the performance of the Commission's duties and responsibilities
under the Investment Company Act of 1940; and (5) the
supervision and direction of investigations into complaints or other
evidences of violation of related provisions of the above-mentioned statutes.

Public Utilities Division.--This Division is responsible for the
work involved in the Commission's administration of the Public Utility
Holding Company Act of 1935, relating to public utility holding companies
and their subsidiary and affiliated companies Included in the
matters arising thereunder over which the Commission has jurisdiction
are the issue and sale of securities; the acquisition of securities, utility
assets, or interests in other businesses; dividend practices; proxy and
other solicitations; intercompany loans; maintenance of competitive
conditions; service, sales and construction contracts; and geographic
and corporate simplification The consideration of these matters
involves investigations, financial, and legal analysis, and the conduct
of hearings and the development of complete factual records upon
which Commission actions are based.

Trading and Exchange Division.--Under the Securities Exchange
Act this Division is responsible for the constant surveillance of the securities
markets to prevent and to detect manipulation and fraud.
The Division supervises the conduct of investigations of manipulative
and deceptive acts and practices on national securities exchanges and
in the over-the-counter markets upon complaint or where evidence of
said practices come to its attention. It is responsible for the registration
of national securities exchanges, national associations of securities
dealers, and over-the-counter brokers and dealers; the formulation
of rules for the regulation of activities in securities markets;
superivison of the rules of national securities exchanges and national
associations of securities dealers; the conduct of hearings in proceedings

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to revoke the registration of over-the-counter brokers and dealers,
to suspend or expel members from national associations of securities
dealers, and to suspend or expel members from national securities
exchanges; and the conduct of research activities and other studies
for use by the Commission, and the assembling and maintenance of statistical
and analytical information on securities markets. The Division
also is responsible for the performance of the Commission's duties and
functions under the Investment Advisers Act of 1940.

Administrative Division.--This Division is responsible for the administrative,
fiscal, personnel, clerical, and other business management
activities of the Commission, and has custody of the dockets and files
of the Commission.

Trial Examiners.--The Commission has a staff of Trial Examiners
who are assigned to preside at hearings ordered by the Commission, to
rule on the evidence offered for introduction at such hearings, and in
certain cases to prepare and file with the Commission advisory reports
setting forth their findings of fact.

Regional Offices.--The regional offices are charged with the responsibility
of conducting trading, accounting, and legal investigations
and hearings, with a view to the efficient enforcement of the
laws administered by the Commission. The regional offices also participate
on behalf of the Commission in reorganization proceedings
under Chapter X of the National Bankruptcy Act, as amended, and in
injunctive actions instituted by the Commission in the various Federal
courts. Each regional office serves the general and investing public
by aiding registrants and accounting, legal and investment firms, in
complying with the statutes and the rules and regulations administered
and enforced by the Commission. Complaints and inquiries may be
directed to any regional office of the Commission or to the headquarters
office in Philadelphia. Registration statements under the Securities
Act and applications for the qualification of indentures under the
Trust Indenture Act may be delivered to regional offices for forwarding
to Philadelphia. In addition. facilities for the registration of
securities and the qualification of indentures are maintained in the
San Francisco Office. Registration statements and other public documents
filed with the Commission are available for public inspection, to
a limited extent, in its regional offices in New York and Chicago.